Telefónica tries to scare away the “danger”: this is the level that it should not lose


Increases of 0.52% for Telefónica at mid-morning to reach 3.86 euros within an IBEX 35 that at the same time rises 0.40% encouraged by the strong increases in Inditex. The stock rebounds after falling more than 2% yesterday.

As explained Diego Morín, IG analyst, Telefónica’s drops yesterday led it to “drill the double bottom on the daily chart corresponding to the lows created last May”. “The value has been making decreasing maximums since its annual high (4.15 euros) and could pierce the support for May given the existing weakness,” warns the expert.

In addition, “despite remaining within a bearish lateral range, Telefónica’s shares have stagnated between 4.03 and 3.87 euros, although presents a “danger” in the short term, the loss of the upward trend that has been developing since last December of the year 2022”.

“The worst possible scenario for Telefónica is the loss of said level and extend falls towards 3.75 euros, a level that would act as support for us but that was previously the high part of a very wide lateral range (3.75 and 3.23 euros) that lasted a little over 3 and a half months”. Above, “it should consolidate 4 and 4.15 euros respectively, although I consider that its target price remains around 4.25 euros,” says the IG expert.

Telefónica’s shares have accumulated a rise of 13.8% so far this year, with a market capitalization of around 22,160 million euros, but much of this optimism was frustrated after the presentation of results at the beginning of May.

However, “Telefónica’s accounts were not negative, on the contrary, they improved the consensus forecasts, with revenues (+4.85%) and OIBDA (+1.19%),” explains Morín. Although the latter lagged behind Q4 2022, “I believe that it remains in line to achieve its target results for 2023.”

Next, “the Spanish teleco has a high dividend yield (+7.4%), although an economic slowdown could also jeopardize debt elimination targets and future growth. In addition, “it is not a sector in which it would be positioned given the current environment, but further mergers in the sector could give Telefónica a greater competitive advantage, thus reducing the number of operators by country and bringing consolidation to the sector”, concludes the IG expert.

reference: www.estrategiasdeinversion.com


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